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  • FIRST POST
    • edinburgher
    • By edinburgher 16th May 17, 8:21 AM
    • 10,650Posts
    • 55,305Thanks
    edinburgher
    Vanguard direct to customer offering confirmed
    • #1
    • 16th May 17, 8:21 AM
    Vanguard direct to customer offering confirmed 16th May 17 at 8:21 AM
    Looks like Vanguard are taking the wraps off their new direct to customer offering - wonderful

    https://www.ft.com/content/6821ce50-3976-11e7-821a-6027b8a20f23

    I know that this has been on the cards for some time, but it's nice to see some specifics confirmed (0.15% admin costs for £500+)

    Another article:

    https://www.theguardian.com/business/2017/may/16/vanguard-funds-investment-isa-uk-fees-hargreaves-lansdown-fidelity
    Last edited by edinburgher; 16-05-2017 at 8:24 AM.
Page 6
    • Gadfium
    • By Gadfium 17th May 17, 8:45 PM
    • 607 Posts
    • 1,117 Thanks
    Gadfium
    I think that it's a great move and hope that, medium term, they work to reduce the costs further. If you hold a large Vanguard holding then the capped fees must be attractive.

    For me, I hold low 6 figures in VLS in iWEB, so it's cheaper for me to remain as is. I welcome their entry to the UK market though.
    • eskbanker
    • By eskbanker 18th May 17, 12:31 AM
    • 4,980 Posts
    • 4,720 Thanks
    eskbanker
    I want to move my ISA, I want to get a decent divided how do I check the Vanguard units to see which pay the higher divided. I can see how you pick a trust ie 60/40, 20/80 etc but I cannot find anywhere to say what the divided rate is I am looking for between 4 and 5%
    Originally posted by bowlesbargain
    Since they're funds of funds they obviously can't commit to dividend percentages in advance but for historical figures just compare the Acc versus Inc performances for each version, as the variance between these equates to the dividends paid out....
  • jamesd
    trying to pick the 1 in 10 funds that beat the market...
    Originally posted by hennerz
    How successful have you been in picking passive funds that consistently beat their market index, without using funds with active strategies like stock lending on top of their passive core? If you ever managed it, were you unhappy with the tracking error or did you regard it as desirable?

    In the active world it's relatively easy and you start in the same way as you might start in the passive world: by eliminating the consistent under-performers. In the passive world that means eliminating expensive funds like those from Vanguard or the even more expensive one percent chargers. Eliminating the ones that exploit tied in buyers or inertia - many pension funds - also helps. Then avoid biasing the study by ignoring the things that are normally done by those paying attention to active funds, like leaving when the human manager changes or by pretending that lots of money was in the junk funds that were closed after people left them or never bothered with in the first place because they were dogs just like a two percent charging FTSE tracker would be.

    The SPIVA scorecard you quoted from is useless as a comparison tool because of its built in bias, which comes from ignoring the things that matter in active fund selection and only keeping the things which matter to passive selection. Nobody should be surprised that a firm which makes its money by selling the right for trackers to use its indexes would produce a measuring tool with built in bias. You might try looking for a SPIVP scorecard though. S&P probably don't provide one but to get you started just put 100 in the percentage of passive funds underperforming their benchmark boxes.

    Also interesting that HL's platform is cheaper than Vanguard's, for unwrapped ETFs, with a 0% platform charge.
    Last edited by jamesd; 18-05-2017 at 1:56 AM.
  • jamesd
    So, could I open a S&S account with Vanguard instead. I know you are only allowed one S&S account in a single tax year, but am guessing it only kicks in once I transfer funds
    Originally posted by Hal17
    There's no limit on the number of cash (except HTB), S&S or IF ISAs that can be opened in each tax year. If you want a few hundred, no problem.

    The limit is only one of each type that has money newly subscribed (paid in) in the current tax year. If you want to transfer any of the current year subscription to the same type you must transfer it all. You're right that you have no restriction from the Charles Stanley account because you hadn't subscribed money to it yet.

    Of the few hundred that you could open, all but one of each type would need to have either only past year money via a transfer or no money at all in them.
    Last edited by jamesd; 18-05-2017 at 1:42 AM.
  • jamesd
    luckily my holdings in Vanguard with HL are relatively small e.g. 10k and I realise I lose the ISA allowance for this year but I wont be able to use the full 20k anyway.. so makes sense to just sell cash out and buy back in. I already have opened my account so process wont take more than few days.
    Originally posted by cashbackproblems
    There's no reason to lose any ISA allowance, just sell then ISA transfer the cash. If you have both past and current year money you might be able to arrange to pick whichever of the two you want for the transfer.
    • Redski69
    • By Redski69 18th May 17, 8:38 AM
    • 22 Posts
    • 12 Thanks
    Redski69
    has anyone started their transfer from HL yet?
    I am wondering what approach HL will take on this. Do you guys think they will reduce their fees within a matter of weeks or not?
    Originally posted by MarcoM
    They've just announced some pretty impressive performance stats !

    In its latest trading statement released today, HL reported net new business of £3.3bn during the four-month period under review, and year to date this rose to £5.6bn.

    AUA increased by 10% from £70bn to £77bn in the four months to 30 April, while total net revenue was £131m. The group said this was a result of net new business, higher market levels and strong share dealing volumes.

    This makes year to date net revenue £316m, 17% higher than the same time in 2016 ...
    Last edited by Redski69; 18-05-2017 at 8:57 AM.
    • racey
    • By racey 18th May 17, 8:45 AM
    • 129 Posts
    • 43 Thanks
    racey
    Could you provide a source for these figures?
    Originally posted by koru
    I seem to manage it regularly. As do many other investors in the UK. Mainly as they are not blinkered to the passive bias that some people like you have. Where passive is best, it should be used. Where managed is best, it should be used.

    ....70pc of actively managed European funds beating the best European tracker over 10 years. Among Asia funds, 55pc of active portfolios beat the best tracker over a decade, while the figure for the UK was 52pc.
    Forty-eight per cent of global funds with human managers outperformed the best passive fund over 10 years, compared with 38pc of Japanese funds. In last place were active US funds, only a third of which managed to beat the top tracker.
    Overall, 50pc of active funds beat tracker funds over the past decade. The figures are net of fund charges (and remember this includes the charges back from the bundled days and not unbundled world we live in now. These are UK domiciled funds priced in GBP.
    Originally posted by dunstonh
    Could you please provide the source of this information?
    Last edited by racey; 18-05-2017 at 2:34 PM.
    • cloud_dog
    • By cloud_dog 18th May 17, 9:27 AM
    • 3,061 Posts
    • 1,647 Thanks
    cloud_dog
    I want to move my ISA, I want to get a decent divided how do I check the Vanguard units to see which pay the higher divided. I can see how you pick a trust ie 60/40, 20/80 etc but I cannot find anywhere to say what the divided rate is I am looking for between 4 and 5%
    Originally posted by bowlesbargain
    Hi... Look on Trustnet for the Vanguard management group and you will then see the relative yield for the trusts you mention plus others in the group. Obviously, there are no guarantees for the ongoing yield.
    Last edited by cloud_dog; 18-05-2017 at 9:29 AM.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • Pincher
    • By Pincher 18th May 17, 10:03 AM
    • 6,516 Posts
    • 2,489 Thanks
    Pincher
    Why bother catching it on the way down?
    The Trump slump is happening.

    Ideally, the crash bottoms out in 2018, as my religion says, praise be to the rule of 8, and sterling recovers to GBP1:USD1.5 , so if I buy a world fund, I get more for my money.

    As it happens, my bits and pieces pensions from twenty years ago are all With Profit, so supposedly will not go down in value if I transfer out during a crash. So, let it all crash, then transfer to a Vanguard SIPP in 2018. I know, Market Value Adjustment, sneaky slippery snakes.
    • koru
    • By koru 18th May 17, 10:08 AM
    • 1,237 Posts
    • 623 Thanks
    koru
    Could please provide the source of this information?
    Originally posted by racey
    Based on clues in post 82, I worked out it is from this Telegraph article: http://www.telegraph.co.uk/finance/personalfinance/investing/funds/11512441/Do-trackers-beat-active-funds-Our-new-analysis-has-the-answer.html

    Trouble is, you really need to look at long term performance, to eliminate most of the random fluctuation. But if you look at 10 year performance, both active and passive funds had much higher fees than they do now, so the results may not be a good indication of what will happen going forward. Another flaw with the Telegraph data is that it does not account for funds that discontinued during the period. These will tend to be the underperformers.

    I'm coming to the view that the core issue on passives vs actives is whether you believe you (or your adviser) can pick, in advance, the active funds that will outperform. Clearly some will outperform passives, though what proportion will do so is still debatable. Clearly, most people who pick a range of actives will end up with some that outperform, which may convince them that picking the winners is easy. Whether they are taking a balanced view of their overall success is something only they can judge.
    koru
    • MPN
    • By MPN 18th May 17, 10:51 AM
    • 187 Posts
    • 59 Thanks
    MPN
    [QUOTE=koru;72566248 I'm coming to the view that the core issue on passives vs actives is whether you believe you (or your adviser) can pick, in advance, the active funds that will outperform. Clearly some will outperform passives, though what proportion will do so is still debatable. Clearly, most people who pick a range of actives will end up with some that outperform, which may convince them that picking the winners is easy. Whether they are taking a balanced view of their overall success is something only they can judge.[/QUOTE]

    I think that's about right, its a very personal choice/opinion. I mix passive with active funds in my investment portfolio and nothing has convinced me to change this philosophy and invest solely in passive funds.

    I have only been investing for about 18 years but in that time I personally have been more than happy with my active funds so I won't be changing my strategy. I am also pleased with my two passive funds and will retain them in my portfolio as well.
    • EdSwippet
    • By EdSwippet 18th May 17, 11:08 AM
    • 485 Posts
    • 447 Thanks
    EdSwippet
    Another flaw with the Telegraph data is that it does not account for funds that discontinued during the period. These will tend to be the underperformers.
    Originally posted by koru
    Interesting. This survivorship-bias study from Vanguard covers five years and includes 'dead' funds. Of those measured, active funds underperform overall, but active UK equity funds come closest to active/passive parity, with around 53% or so of them underperforming trackers. So if you're going to pick funds with darts and a dartboard, this is the sector in which to do it (and the US is definitely not the sector for that).

    Also, bear in mind that some active funds are not really active. Aggregating enough of those could at least partly explain why UK funds show a close degree of active/passive parity.

    These two probably underpin a chunk of of why this debate in the UK just runs, and runs, and runs, and runs, and...
    • ChopperST
    • By ChopperST 18th May 17, 11:12 AM
    • 1,055 Posts
    • 716 Thanks
    ChopperST
    Can someone clarify if I have paid into a CSD ISA this year and I transfer out all my holdings to Vanguard and close my CSD account completely I can contribute to the Vanguard ISA this year or would I have to continue with CSD and transfer in April 2018?
    • badger09
    • By badger09 18th May 17, 11:24 AM
    • 5,065 Posts
    • 4,261 Thanks
    badger09
    They've just announced some pretty impressive performance stats !

    In its latest trading statement released today, HL reported net new business of £3.3bn during the four-month period under review, and year to date this rose to £5.6bn.

    AUA increased by 10% from £70bn to £77bn in the four months to 30 April, while total net revenue was £131m. The group said this was a result of net new business, higher market levels and strong share dealing volumes.

    This makes year to date net revenue £316m, 17% higher than the same time in 2016 ...
    Originally posted by Redski69
    New tax year ISA and SIPP contributions
    • badger09
    • By badger09 18th May 17, 11:27 AM
    • 5,065 Posts
    • 4,261 Thanks
    badger09
    Can someone clarify if I have paid into a CSD ISA this year and I transfer out all my holdings to Vanguard and close my CSD account completely I can contribute to the Vanguard ISA this year or would I have to continue with CSD and transfer in April 2018?
    Originally posted by ChopperST
    Yes.

    You must arrange for Vanguard to transfer all your current year ISA subscriptions from CSD. Once that's done, you can contribute new money to the Vanguard ISA.

    If you have previous year ISA subscriptions with CSD, you can include those within the transfer, leave them with CSD, or transfer elsewhere.
    • Linton
    • By Linton 18th May 17, 11:35 AM
    • 7,950 Posts
    • 7,752 Thanks
    Linton
    ......
    I'm coming to the view that the core issue on passives vs actives is whether you believe you (or your adviser) can pick, in advance, the active funds that will outperform. Clearly some will outperform passives, though what proportion will do so is still debatable. Clearly, most people who pick a range of actives will end up with some that outperform, which may convince them that picking the winners is easy. Whether they are taking a balanced view of their overall success is something only they can judge.
    Originally posted by koru
    At the moment I only hold active funds though I have held a few passives in the past. As far as my investing is concerned the key issue isnt outperformance or trying to predict winners. The concept of outperformance only makes sense if you are comparing funds that invest in the same things with the same objectives. If funds invest in different things or have different objectives they will behave differently - obviously, so what?.

    One key issue for me is asset allocation for diversification. In general passive funds constrain you to investing in companies in proportion to their market capitalisation which to me makes as much as sense as investing according to the position in an alphabetical list. (To be fair, I have a vague memory of some statistically significant data from many years ago showing that companies high in an alphabetic list tended to perform better than those near the bottom!). A completely passive portfolio is dominated by global companies which operate in a single global market and so will tend to be highly correlated within any sector - you lose much of the possible benefit of geographic diversification.

    Another factor is that some areas of investing clearly require human intervention. Income funds are an obvious example where a purely passive approach cant distinguish between a high yield because a company is successfully generating high dividends and one where the share price has recently dropped significantly. They also can suffer by over=focussing on particular sectors. Look up what happened to IUKD in the 2008 crash. Aside from the income area, small companies and industry specific niche funds can benefit from expert knowledge of the companies concerned.
    • Glen Clark
    • By Glen Clark 18th May 17, 11:46 AM
    • 3,739 Posts
    • 2,728 Thanks
    Glen Clark
    Seems to be a misconception that active managers as a whole cannot beat the market. But that only applies when active managers hold all the market. If 90% of the market is held in passive funds its theoretically possible for active managers to hold only the best performing 10%
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • BananaRepublic
    • By BananaRepublic 18th May 17, 11:53 AM
    • 819 Posts
    • 574 Thanks
    BananaRepublic
    How successful have you been in picking passive funds that consistently beat their market index, without using funds with active strategies like stock lending on top of their passive core? If you ever managed it, were you unhappy with the tracking error or did you regard it as desirable?

    In the active world it's relatively easy and you start in the same way as you might start in the passive world: by eliminating the consistent under-performers. In the passive world that means eliminating expensive funds like those from Vanguard or the even more expensive one percent chargers. Eliminating the ones that exploit tied in buyers or inertia - many pension funds - also helps. Then avoid biasing the study by ignoring the things that are normally done by those paying attention to active funds, like leaving when the human manager changes or by pretending that lots of money was in the junk funds that were closed after people left them or never bothered with in the first place because they were dogs just like a two percent charging FTSE tracker would be.

    The SPIVA scorecard you quoted from is useless as a comparison tool because of its built in bias, which comes from ignoring the things that matter in active fund selection and only keeping the things which matter to passive selection. Nobody should be surprised that a firm which makes its money by selling the right for trackers to use its indexes would produce a measuring tool with built in bias. You might try looking for a SPIVP scorecard though. S&P probably don't provide one but to get you started just put 100 in the percentage of passive funds underperforming their benchmark boxes.

    Also interesting that HL's platform is cheaper than Vanguard's, for unwrapped ETFs, with a 0% platform charge.
    Originally posted by jamesd
    I've just checked four of my funds, all active European funds, and over the last 5 and 10 years all four have outperformed the European index funds I looked at. I wasn't able to check all European index funds, just a handful. Over five years the outperformance was at least 2%. Over ten years it was higher, in one case by 6%. My best fund has rocketed upwards over almost 20 years. It looks as if the index funds took a larger hit in the crash. In any case, these funds have done very well even taking charges into account. My worst funds are passive, such as a UK index fund, although they have done very well compared to cash in a savings account.

    I am sure it is not hard to work out the likelihood of an active fund in a given sector performing well for a further 5 years given good performance over the previous 5 years. Historical data would suffice.
    • hennerz
    • By hennerz 18th May 17, 11:56 AM
    • 171 Posts
    • 32 Thanks
    hennerz
    How successful have you been in picking passive funds that consistently beat their market index, without using funds with active strategies like stock lending on top of their passive core? If you ever managed it, were you unhappy with the tracking error or did you regard it as desirable?

    In the active world it's relatively easy and you start in the same way as you might start in the passive world: by eliminating the consistent under-performers. In the passive world that means eliminating expensive funds like those from Vanguard or the even more expensive one percent chargers. Eliminating the ones that exploit tied in buyers or inertia - many pension funds - also helps. Then avoid biasing the study by ignoring the things that are normally done by those paying attention to active funds, like leaving when the human manager changes or by pretending that lots of money was in the junk funds that were closed after people left them or never bothered with in the first place because they were dogs just like a two percent charging FTSE tracker would be.

    The SPIVA scorecard you quoted from is useless as a comparison tool because of its built in bias, which comes from ignoring the things that matter in active fund selection and only keeping the things which matter to passive selection. Nobody should be surprised that a firm which makes its money by selling the right for trackers to use its indexes would produce a measuring tool with built in bias. You might try looking for a SPIVP scorecard though. S&P probably don't provide one but to get you started just put 100 in the percentage of passive funds underperforming their benchmark boxes.
    Originally posted by jamesd
    Not going to spend too much time replying to everything, you're a smart guy and will do your own research but in short...

    One does not buy a tracker for outperformance. Buying a tracker will, as the name suggests, track the market, less the fee. The fee is ~0.22% for an automatically balancing diversified world portfolio.

    Buying a tracker is saying "why take the risk of trying to pick a 1 in 10 fund manager that can beat the market? When anyone can pick a vast array of vanilla low cost trackers that will provide returns in line with the market.

    Calling the VGLS funds expensive is somewhat misleading as the funds suggested don't match any VGLS portfolio, nor do they auto-balance to the set asset allocation, doing this yourself costs time/money and can quickly eat away at any fee saving, your post didn't mention this.


    Why is Warren Buffet willing to bet against hedge fund managers while advocating tracker funds? Why does he wish his wife to invest in a tracker stating: "long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions, or individuals — who employ high-fee managers" Why is there net inflows into European passive funds in 2016 – both index funds and ETFs – totalled $83 billion and outpaced the $48 billion netted by their active peers?
    • fun4everyone
    • By fun4everyone 18th May 17, 12:02 PM
    • 817 Posts
    • 1,356 Thanks
    fun4everyone
    Hennerz perhaps you should realise there is a difference between the USA and the U.K.
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